ASA International Group plc May 2023 trading and business update
Amsterdam, The Netherlands, 21 June 2023 - ASA International, ('ASA International', the 'Company' or the 'Group'), one of the world's largest international microfinance institutions, today provides the following update on its business operations as of 31 May 2023.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated by the Market Abuse Regulation (EU) No.596/2014, as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"). Upon the publication of this announcement, this inside information is now considered to be in the public domain.
Business review YTD 2023 and revised Outlook
Whilst inflation and related FX movement are affecting the Group, we do see that our operating environment for clients has improved and is expected to continue to do so.
However, our profitability growth expectations are not materialising as expected and as such, we do not expect profits to grow in 2023 compared to levels seen in 2022 due to the following factors:
- Impact on operations in Nigeria following recent elections and demonetization taking longer than expected, alongside a steep rise in fuel costs;
- Devaluation of operating currencies against USD year-to-date has been higher than expected in Pakistan, Ghana, Kenya and Nigeria; and
- Slower recovery of overdue and written off loans in India than expected.
May 2023 Business update highlights
· The Group's Gross OLP increased to USD 346 million (3% higher than in March 2023 and 16% lower than in May 2022), primarily due to increased disbursements in Ghana and Nigeria.
· All operating subsidiaries except India and Nigeria, achieved collection efficiency of more than 90% with 11 countries achieving more than 95%.
· The lower collection efficiency in Nigeria was largely due to continuing impact of cash shortages following the Central Bank voiding old banknotes as legal tender, as well as the challenging operating environment during the elections.
· India collections remained stable at 86% in May 2023 compared to March 2023. Collection efficiency, including regular and overdue collections as well as advance payments, as a percentage of the regular, realisable collections, including advance payments, decreased from 109% in March 2023 to 101% in May 2023.
· PAR>30 for the Group, including off-book loans and excluding loans overdue more than 365 days, decreased to 4.2% in May 2023 from 4.5% in March 2023, primarily due to write-offs of overdue loans in India.
· The PAR>30 for the Group's operating subsidiaries, excluding India and Myanmar, increased to 2.8% in May 2023 from 2.6% in March 2023.
· Excluding all loans which have been overdue for more than 180 days and, as a result, have been fully provided for, PAR>30 improved to 2.5% in May 2023 from 2.6% in March 2023.
· Disbursements as a percentage of collections exceeded 100% in 10 countries. The lower percentage in India was due to cash retention in order to service debt obligations, while Sri Lanka was on account of carefully managing disbursement by reviewing clients' repayment capability due to economic challenges in the country.
Collection efficiency until 31 May 2023(1)
| Countries | Dec/22 | Jan/23 | Feb/23 | Mar/23 | Apr/23 | May/23 |
|
| Pakistan | 99% | 99% | 99% | 99% | 99% | 100% |
|
| India (total) | 87% | 83% | 84% | 86% | 88% | 86% |
|
| Sri Lanka | 93% | 93% | 94% | 95% | 95% | 96% |
|
| The Philippines | 99% | 99% | 99% | 99% | 99% | 99% |
|
| Myanmar | 97% | 97% | 98% | 100% | 99% | 100% |
|
| Ghana | 100% | 100% | 100% | 100% | 100% | 100% |
|
| Nigeria | 94% | 94% | 84% | 78% | 77% | 84% |
|
| Sierra Leone | 93% | 93% | 94% | 95% | 96% | 96% |
|
| Tanzania | 100% | 100% | 100% | 100% | 99% | 99% |
|
| Kenya | 100% | 100% | 100% | 100% | 100% | 100% |
|
| Uganda | 99% | 99% | 99% | 100% | 100% | 99% |
|
| Rwanda | 97% | 97% | 96% | 96% | 96% | 96% |
|
| Zambia | 97% | 97% | 97% | 98% | 98% | 98% |
|
| (1) Collection efficiency refers to actual collections from clients divided by realisable collections for the period. It is calculated as follows: the sum of actual regular collections, actual overdue collections and actual advance payments divided by the sum of realisable regular collections, actual overdue collections and actual advance payments. Under this definition collection efficiency cannot exceed 100%. | |||||||
· Collection efficiency remained broadly stable in most of our operating countries compared to March 2023.
· Adjusted collection efficiency in India, including regular and overdue collections as well as advance payments, as a percentage of the regular, realisable collections, including advance payments decreased from 109% in March 2023 to 101% in May 2023. The substantial difference of this adjusted collection efficiency metric is related to the Group's policy that any loan instalment paid is first credited against the oldest outstanding amount overdue. This has an adverse impact on India's monthly collection efficiency, which is further aggravated by the relatively long duration of the loans disbursed in India. This adjusted collection efficiency metric illustrates that most clients in India continue to make payments on their loans due.
· Although market conditions in both Myanmar and Sri Lanka remained challenging, collection efficiency marginally improved in both markets.
· The lower collection efficiency in Nigeria was largely due to continuing impact of cash shortages following the Central Bank's decision to no longer accept old banknotes as legal tender as of 10 February 2023, as well as the challenging operating environment during the elections. Nigeria's Supreme Court on 3 March 2023, ordered the Central Bank of Nigeria to extend the use of these old banknotes until 31 December 2023.
Loan portfolio quality up to and including May 2023(2, 3, 4)
| | Gross OLP (in USDm) |
| Non-overdue loans |
| PAR>30 less PAR>180 | ||||||
|
| Mar-23 | Apr-23 | May-23 |
| Mar-23 | Apr-23 | May-23 |
| Mar-23 | Apr-23 | May-23 |
| Pakistan | 64 | 64 | 66 | | 99.2% | 99.3% | 99.5% | | 0.5% | 0.4% | 0.3% |
| India (total) | 44 | 43 | 45 | | 68.3% | 69.4% | 67.8% | | 6.4% | 5.0% | 5.3% |
| Sri Lanka | 5 | 4 | 5 | | 89.2% | 88.4% | 85.2% | | 3.7% | 3.6% | 5.1% |
| Philippines | 52 | 52 | 51 | | 97.4% | 97.4% | 97.2% | | 1.2% | 1.2% | 1.2% |
| Myanmar | 18 | 17 | 18 | | 88.0% | 88.1% | 89.1% | | 1.3% | 1.1% | 0.8% |
| Ghana | 35 | 36 | 39 | | 99.3% | 99.3% | 99.7% | | 0.1% | 0.1% | 0.1% |
| Nigeria | 24 | 25 | 27 | | 59.5% | 64.2% | 72.8% | | 15.7% | 19.2% | 16.3% |
| Sierra Leone | 4 | 4 | 4 | | 84.6% | 84.7% | 84.8% | | 6.5% | 5.3% | 4.6% |
| Tanzania | 53 | 54 | 55 | | 99.1% | 99.1% | 99.0% | | 0.4% | 0.4% | 0.5% |
| Kenya | 18 | 18 | 17 | | 99.1% | 99.1% | 99.1% | | 0.2% | 0.3% | 0.3% |
| Uganda | 11 | 11 | 12 | | 99.2% | 98.9% | 98.7% | | 0.4% | 0.4% | 0.4% |
| Rwanda | 4 | 4 | 4 | | 92.0% | 91.4% | 91.5% | | 4.0% | 4.2% | 4.2% |
| Zambia | 3 | 3 | 3 | | 93.0% | 93.3% | 93.5% | | 2.6% | 2.4% | 2.1% |
| Group | 335 | 338 | 346 |
| 90.9% | 91.5% | 91.8% |
| 2.6% | 2.7% | 2.5% |
| | PAR>30 |
| PAR>90 |
| PAR>180 | |||||||
|
| Mar-23 | Apr-23 | May-23 |
| Mar-23 | Apr-23 | May-23 |
| Mar-23 | Apr-23 | May-23 | |
| Pakistan | 0.6% | 0.5% | 0.4% | | 0.4% | 0.3% | 0.3% | | 0.1% | 0.1% | 0.1% | |
| India (total) | 15.8% | 14.7% | 12.7% | | 14.5% | 13.4% | 9.9% | | 9.4% | 9.7% | 7.4% | |
| Sri Lanka | 6.8% | 6.8% | 8.2% | | 5.0% | 5.0% | 5.7% | | 3.1% | 3.2% | 3.2% | |
| Philippines | 1.7% | 1.7% | 1.8% | | 1.1% | 1.3% | 1.3% | | 0.6% | 0.6% | 0.6% | |
| Myanmar | 6.7% | 4.9% | 3.3% | | 6.5% | 4.8% | 3.2% | | 5.4% | 3.8% | 2.5% | |
| Ghana | 0.2% | 0.2% | 0.2% | | 0.1% | 0.1% | 0.1% | | 0.1% | 0.1% | 0.1% | |
| Nigeria | 16.5% | 20.1% | 18.6% | | 4.9% | 5.8% | 8.4% | | 0.8% | 1.0% | 2.3% | |
| Sierra Leone | 11.7% | 11.2% | 10.9% | | 9.6% | 9.9% | 9.7% | | 5.2% | 5.9% | 6.3% | |
| Tanzania | 0.6% | 0.6% | 0.6% | | 0.3% | 0.3% | 0.4% | | 0.2% | 0.2% | 0.2% | |
| Kenya | 0.6% | 0.6% | 0.7% | | 0.5% | 0.5% | 0.5% | | 0.3% | 0.3% | 0.4% | |
| Uganda | 0.6% | 0.6% | 0.7% | | 0.4% | 0.4% | 0.5% | | 0.2% | 0.2% | 0.3% | |
| Rwanda | 6.3% | 6.6% | 6.6% | | 4.1% | 4.5% | 4.7% | | 2.2% | 2.3% | 2.4% | |
| Zambia | 5.1% | 4.9% | 4.4% | | 4.0% | 3.8% | 3.5% | | 2.6% | 2.5% | 2.3% | |
| Group | 4.5% | 4.5% | 4.2% |
| 3.2% | 3.0% | 2.8% |
| 1.9% | 1.8% | 1.6% | |
|
(2) Gross OLP includes the off-book BC and DA model. (3) PAR>x is the percentage of outstanding customer loans with at least one instalment payment overdue x days, excluding loans more than 365 days overdue, to Gross OLP including off-book loans. Loans overdue more than 365 days now comprise 3.0% of the Gross OLP. (4) The table "PAR>30 less PAR>180" shows the percentage of outstanding client loans with a PAR greater than 30 days, less those loans which have been fully provided for. |
| |||||||||||
· Gross OLP in India increased to USD 45 million (3% higher than in March 2023 and 51% lower than in May 2022).
· PAR>30 for the Group improved from 4.5% in March 2023 to 4.2% in May 2023, primarily due to write-offs of overdue loans in India.
· Credit exposure of the India off-book IDFC portfolio of USD 15.7 million is capped at 5%. The included off-book DA portfolio of USD 1.1 million has no credit exposure.
Disbursements vs collections of loans until 31 May 2023(5)
| Countries | Dec/22 | Jan/23 | Feb/23 | Mar/23 | Apr/23 | May/23 |
|
| Pakistan | 86% | 101% | 101% | 107% | 108% | 115% |
|
| India (total) | 26% | 52% | 72% | 87% | 77% | 61% |
|
| Sri Lanka | 89% | 81% | 104% | 120% | 46% | 88% |
|
| The Philippines | 106% | 100% | 104% | 104% | 107% | 98% |
|
| Myanmar | 87% | 124% | 126% | 91% | 80% | 115% |
|
| Ghana | 131% | 89% | 99% | 104% | 117% | 110% |
|
| Nigeria | 82% | 50% | 34% | 58% | 110% | 126% |
|
| Sierra Leone | 94% | 67% | 105% | 118% | 119% | 110% |
|
| Tanzania | 125% | 104% | 103% | 106% | 118% | 110% |
|
| Kenya | 41% | 121% | 112% | 109% | 107% | 106% |
|
| Uganda | 93% | 89% | 107% | 101% | 100% | 103% |
|
| Rwanda | 104% | 78% | 85% | 93% | 100% | 115% |
|
| Zambia | 95% | 102% | 118% | 115% | 132% | 115% |
|
| (5) Disbursements vs collections refers to actual loan disbursements made to clients divided by total amounts collected from clients in the period.
| |||||||
· Disbursements as a percentage of collections exceeded 100% in 10 countries. The lower percentage in India was due to cash retention in order to service debt obligations, while Sri Lanka was on account of carefully managing disbursement by reviewing clients' repayment capability due to economic challenges in the country.
Development of Clients and Outstanding Loan Portfolio until 31 May 2023
| | Clients (in thousands) | Delta | Gross OLP (in USDm) | Delta | |||||||
| Countries | May/22 | Apr/23 | May/23 | May/22-May/23 | Apr/23-May/23 | May/22 | Apr/23 | May/23 | May/22-May/23 USD | May/22-May/23 CC(6) | Apr/23- |
| Pakistan | 561 | 601 | 605 | 8% | 1% | 80 | 64 | 66 | -18% | 17% | 2% |
| India (total) | 442 | 211 | 235 | -47% | 11% | 93 | 43 | 45 | -51% | -48% | 5% |
| Sri Lanka | 49 | 45 | 45 | -8% | 2% | 4 | 4 | 5 | 23% | -1% | 17% |
| The Philippines | 306 | 328 | 330 | 8% | 1% | 48 | 52 | 51 | 6% | 13% | -2% |
| Myanmar | 109 | 97 | 98 | -10% | 2% | 20 | 17 | 18 | -10% | 2% | 2% |
| Ghana | 163 | 180 | 181 | 11% | 0% | 43 | 36 | 39 | -9% | 31% | 8% |
| Nigeria | 233 | 170 | 164 | -29% | -3% | 40 | 25 | 27 | -33% | -26% | 7% |
| Sierra Leone | 41 | 35 | 35 | -14% | 0% | 6 | 4 | 4 | -34% | 14% | -9% |
| Tanzania | 199 | 223 | 225 | 13% | 1% | 42 | 54 | 55 | 33% | 35% | 2% |
| Kenya | 131 | 163 | 170 | 30% | 5% | 20 | 18 | 17 | -16% | 0% | -7% |
| Uganda | 100 | 104 | 108 | 8% | 4% | 11 | 11 | 12 | 5% | 5% | 0.3% |
| Rwanda | 18 | 20 | 19 | 8% | -1% | 4 | 4 | 4 | 7% | 18% | 4% |
| Zambia | 18 | 22 | 22 | 28% | 2% | 2 | 3 | 3 | 32% | 49% | -6% |
| Total | 2,370 | 2,197 | 2,239 | -6% | 2% | 413 | 338 | 346 | -16% | -0.8% | 2% |
(6) Constant currency ('CC') implies conversion of local currency results to USD with the exchange rate from the beginning of the period.
· The Group's Gross OLP slightly increased to USD 346 million (3% higher than in March 2023 and 16% lower than in May 2022), primarily due to increased disbursements in Ghana and Nigeria.
Key events in May and June 2023
In India, a memorandum of understanding was signed by Microfinance Institutions with Assam Government, whereby regular/defaulting clients will be provided incentive/relief by The Government of Assam in categories I to III. The Assam Government has since honoured its commitment to reimburse clients/Microfinance entities for Category I and Category II payments. In a recent communication, the Assam Government has clarified that they would be settling the overdues of Category III customers with payments made directly to the associated MFIs by March 2024 not exceeding the OLP balance of ASA India of approximately USD 4.2 million.
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The person responsible for the release of this announcement on behalf of the Company for the purposes of MAR is Tanwir Rahman, CFO.
Enquiries:
ASA International Group plc
Investor Relations
Mischa Assink ir@asa-international.com
About ASA International Group plc
ASA International Group plc (ASAI: LN) is one of the world's largest international microfinance institutions, with a strong commitment to financial inclusion and socioeconomic progress. The company provides small, socially responsible loans to low-income, financially underserved entrepreneurs, predominantly women, across South Asia, South East Asia, West and East Africa.
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